Japan's Retail Sales Plummet 9.7% In March, Fuelling Speculation Of Further Monetary Policy Rasing

'If you think about the consumer's importance ... it's 60 percent of the Japanese economy, I think this ratchets up the pressure on the Bank of Japan (BOJ) in order to introduce more stimulus.' - Joe Zidle, a portfolio strategist at Richard Bernstein Advisors

Retail sales in Japan declined at the fastest pace on record in March, underscoring the inability of BoJ policy makers to underpin demand and fuelling speculation of further monetary policy easing. Japan's retail sales plummeted 9.7% on-year in March, falling for a third consecutive month, after last year's surge in sales as shoppers spent lavishly ahead of a sales-tax hike. Analysts had expected a smaller decline of 7.3%. Measured on a monthly basis, sales in March decreased a seasonally adjusted 1.9%. This week market participants will turn their attention to the BoJ's policy meeting as well as a slew of other fundamentals this week, including industrial production, inflation and employment, for clues on the world's third biggest economy's performance in the final month of the first quarter. The central bank is seen to hold off on expanding stimulus at Thursday's policy gathering, but remains under pressure to step up stimulus to underpin the economy again after last year's April sales tax hike undermined consumption.

Meanwhile, rating agency Fitch downgraded the country's sovereign credit rating, saying Shinzo Abe's government has not undertaken enough measures to reduce Japan's debt and deficit. The move by Fitch to cut the rating to 'A' follows a similar decision by Moody's, which downgraded Japan several months ago, and comes amid growing calls to bring the country's debt to sustainable levels